Allcargo: There is enormous potential in the Indian logistics industry
How do you see the changing scenario and prospect of the Indian logistics Industry in the wake of government's thrust on infrastructure development projects, Make in India drive, and mushrooming e-commerce business?
Logistics infrastructure of any economy is a big indicator of growth, narrating the story of progress and development, or the lack of it. In India, the potential of the sector is such that it can easily chart out India’s success story, albeit if tapped in the right way.
Despite weak economic sentim-ents, the logistics industry continues to witness growth owing to subsequent growth in retail, e-commerce, and manufacturing sectors.
The Indian logistics sector comprises inbound and outbound segments of the manufacturing and service supply chains. Of late, the development of logistics infrastructure has gained a lot of attention both from the business industry as well as policy makers. The role of managing this infrastructure to effectively compete with other nations, has been managed efficiently by the government. The growing e-commerce business and other initiatives like Make in India, Sagarmala etc by the government, are providing business scope for the logistics players in the market.
Which transport segment among road, rail, air, or inland waterways, is the major growth driver for the Indian logistics Industry?
The logistics sector in India, in essence, primarily comprises freight and transportation via road, rail, air and water, as well as ancillary sectors like warehousing and cold storage. However, the distribution of various modes of transportation in India shows a dramatic contrast to that of other countries, with road networks making up 60% of total freight traffic. If compared internationally, movement of goods by roads account for 37% of freight traffic in the US, while the corresponding figure in China is just 22%. Rail and coastal shipping come next in line in India, constituting approximately 32% and 7%, respectively. On the other hand, inland water transportation and air account for less than 1% each. Movement through roadways is popular in India, considering the smaller lots of goods transported coupled with cost benefits as compared to other modes.
Movement through railways and the coast has not yet been tapped to its full potential. Having said that, the government is renewing its focus on the issue of connectivity through railways following the recent announcements. Dedicated Railway Freight Corridor is one of the key developments in this direction.
With 21 port-rail connectivity projects under the Sagarmala programme, the Rail Ministry is focused on developing and improving the railways for better connectivity of shipments. This would also be complemented by Bharatmala Project, which aims to improve port connectivity in the country by improving the connectivity of national highways to coastal and border areas.
As railway is a high cost mode of transportation as compared to road and coastal movements, the initiatives by the government will definitely make rail and coastal ways amongst the growth drivers of the Indian economy.
"Allcargo is the leader in CFS & ICD segments in India and is committed towards delivering beyond customers’ expectations."
GST Bill is set to revolutionize the logistics sector. Since the sector in itself is highly fragmented with about 14% of India’s GDP spent as logistics owing to inefficiencies, such radical reforms are critical to keep the economy growing productively.
Presently, when it comes to inter-state movement of goods, we function as different countries within a country. This is because of delays owing to multiple tax structures, multiple checkpoints, paperwork and documentation, delays due to different policies, regulations and approval mechanisms in different states. GST will create a common ground without differentiating interstate and intrastate sales.
Implementation of GST will be two-fold beneficial. It will reduce the overall logistic cost and it will also give the option of aligning the development and use of warehouses as per the logical logistics flow instead of being located in the states which are tax optimal.
Allcargo Logistics Ltd., today, is recognized as the leading integrated logistics solutions provider in India. Please throw some light on the progress of the Group since its inception. What is the core strength of the company and the segments it caters to?
Today, being the global leader in LCL (Less than Container Load) consolidation, offering direct outbound and inbound LCL groupage services to and from major cargo destinations worldwide, we serve operations in four key areas of the logistics business.
Allcargo Logistics was incorporated in August 18, 1993 as a private limited company under the name Allcargo Movers (India) Pvt Ltd. The company commenced operations as a shipping agency and also provided freight forwarding services. In the year 1995, an association was formed with Ecu Line NV, Belgium, to serve as the agents in Mumbai and New Delhi. From June 1998, Allcargo became a Multimodal Transport Operator by obtaining the license from the Ministry of Shipping, Government of India.
CFS is the strength of the company. Allcargo is the leader in CFS & ICD segments in India and is committed towards delivering beyond customers’ expectations.
“GST Bill is set to revolutionize logistics sector and its Implementation will be two-fold beneficial. It will reduce the overall logistic cost and will also give the option of aligning the development and use of warehouses as per the logical logistics flow instead of being located in the states which are tax optimal.”
What was the objective behind rebranding Allcargo’s global subsidiaries as ‘ECU Worldwide’?
Allcargo Logistics, the pioneers in Indian logistics, acquired Belgium based ECU–Line, in 2006. Gradually, over the years, we expanded to a network of offices and now stand at a strong 300+ offices across 160 countries. In May 2016, we decided to bring all our offices under single brand name, giving it a uniform identity rebranded as ECU Worldwide.
The rebranding move was driven with the desire to adapt to changing business demands and leverage the network that has been built globally. It also is in line with our vision to being committed to bridging geographies with smart integration of technology. The tagline ‘Geography Simplified’ signifies that we are focused towards delivering our customers’ cargo to the remotest locations.
ECU Worldwide’s wide variety of value added services and outsourcing solutions make ECU Worldwide exceptionally competent in handling and transporting complex cargo anywhere in the world, seamlessly.
How can schemes like Sagarmala bring down the logistics cost of the country?
A study released by the Ministry of Shipping, India, estimates that the Sagarmala project can save up to `40,000 crore per year spent on logistics by key industries. India provides a significant potential for movement of cargo using coastal shipping line – which is significantly cheaper than road or rail transport. Sagarmala aims to leverage the country’s coastline and inland waterways to drive industrial development thereby reducing the load factor of goods transported through roads. For eg., the thermal power plants in the country use the rail and road networks for their coal linkages, if these are transported to the plants via waterways it will drastically bring down the logistics costs, along with subsequent reduction in the power tariff in the country.
If we are to be a country to compete in the international market, we have to look at bringing down the logistics costs from the current 18% to 10% or less. Sagarmala has the potential to help us achieve that.
What are the growth drivers of the warehousing and logistics sector, in particular?
What opportunities do you envisage for the sector during fiscal 2017?
The Commerce Ministry’s move to revive exports by improving the ease of doing business in the country and giving priority status to export credit. More over, clearance of the long awaited GST bill and changes in the Customs & Excise Duty Rates will boost the sectoral growth.
“If we are to be a country to compete in the international market, we have to look at bringing down the logistics costs from the current 18% to 10% or less. Sagarmala has the potential to help us achieve that.”
Lifting & Specialized Transport April-June 2017
